There’s a reason we call them ‘traditional’ enterprises. They define how business was conducted in the past, in a market that was just as traditional. The producers produced, the consumers consumed. But with the emergence of the prosumer (as Alvin Toffler would speak of them), markets are no longer traditional. This new, dynamic, dialog-led marketplace makes hitherto unknown demands on the enterprise. The business of today can no longer be ‘chugging along smoothly’. It needs constant updates and upgrades on the go. Also, they need to be ‘programmable’. Why are these two forms of enterprises different? And why does it matter?
The market scape is becoming increasingly complex
Globalisation changes the definition of markets. Globalisation is what happens when goods, ideas, people, services and capital move from one nation to another. This breaks down the notion of a market rooted in geography and time. When markets become complex, simply coping with emergent market phenomena makes the business system increasingly complex. And complexity cannot be managed by simple rules. In traditional organisations, efficiency is the mantra – think TQM, Six Sigma. The traditional enterprise is a ‘managed enterprise’. In programmable enterprises, agility is the mantra – think lean and continuous innovation. The programmable enterprise is an ‘adaptive enterprise’.
The org chart is outdated
The traditional organisation was hierarchical. The company controlled its share of market and the CEO was in charge. Commands flowed from the top and the front line managers merely executed. But with today’s markets, the customer is in control – information flows bottom up and the frontline managers are in charge. The org chart – that defining structure of traditional enterprise, increasingly does not work. The network is the defining structure of the programmable enterprise. Business practices need fluid and collaborative teams that can be ‘programmed’ to deliver a business outcome. The demands placed on enterprise IT today reflect this shift rather well. Enterprise IT is required to aid ‘flocking’ behaviour and situational leadership at the edge of the organisation, not the center. APIs, low-code and AI are the major technologies aiding this ‘digital’ transition. Collaboration, virtualization, citizen developers and shadow IT are all signs of enterprises undergoing a radical and deep transformation of their structure.
Data is the new cash
Traditional enterprises were largely about cash flow management and revenue, because the value creation process was pretty much defined. Revenue was linked to increasing market share. In the programmable enterprise, value creation is nearly continuous. This links revenue with innovation. As a consequence, data becomes the new currency. Data is the new raw material for strategy, forecasting and planning. Traditional enterprises were smart with cash. They knew how to invest money and what to produce. Programmable enterprises are data-smart. They know how generate and look for relevant data and turn it into a ‘cash cow’.
The traditional enterprise structure worked for maximising value in an industrial economy. That structure no longer works in the new digital economy. Today’s enterprises need to be responsive, adaptive and ‘programmable’. That’s no longer a choice, but a necessity.
By: Siddharth Kumar, Director – Marketing & Brand Strategy at Pramati Technologies